Matt Toner: B.C.'s Petronas LNG deal is bad economic policy and profoundly undemocratic

All the democracy you can afford

    1 of 1 2 of 1

      It’s both sad and instructive to watch the people of Greece being brought to heel by their creditors.

      Regardless of your political stripes, you should admire any government that—like Syriza—campaigned on a clear message to better the lot of the average citizen, received a mandate to do so, then—when pressed—returned to the electorate and received an even stronger mandate to continue that work.

      And then you should be just as saddened by how powerless this same government turned out to be against the forces arraigned against them. It’s been called a coup d’etat and, in this case, it was achieved more by the bank ledger than the barricade.

      Faced by a cataclysmic institutional backlash from their quasi-elected creditors in Berlin and Brussels, Greece is being forced back into a wholly futile process of austerity. As a result, the citizens of Greece will continue to pay for the mistakes made years ago by the same governments that led them into the Eurozone.

      So much for democracy: the will of the people is slowly being ground down until it can fit neatly beneath the feet of the country’s creditors.

      This scenario is, of course, not unique to Greece: it is part of a broader economic doctrine that has gripped the West with increasing strength for the past 40 years. When it comes to representing the interests of the people—the very essence of democracy—the power of elected representatives is being steadily curtailed in favour of the rights of big business and even bigger finance. And our politicians are happily complicit in their own neutering.

      This where the instructive part becomes important. There are lessons that we in British Columbia must draw from the Greek sunset and we must start applying them today.

      This week, there will be a special session of the provincial legislature to approve enabling legislation for a sweeping LNG investment by a multinational company called Petronas. One might think this special session is something of a step forward for a government that doesn’t seem especially enamoured of the day-to-day business of democracy, until you dig a bit deeper into the details of the bill they intend to enact.

      The Petronas agreement is quite a piece of work. In return for an impressive sounding investment of $36 billion, the government is ready to accept a series of very binding constraints on top of other recent accommodations made to environmental regulations, tax regimes, and royalty payments—you know, the basic tools of government.

      Now, the B.C. Liberal government is prepared to go a big step further. This week’s enabling legislation contains incredible provisions that allow dollar-for-dollar compensation to Petronas should this government or any government for the next 25 years impose regulatory changes that adversely impact their investment.

      A sweetheart deal for Petronas—but one that is both bad economic policy for British Columbia and profoundly undemocratic.

      What should really draw our concern is the near-certainty that this “deal” will provide a template for every other LNG investment the B.C. Liberals attempt to close before the 2017 election. The subsequent feeding frenzy will make Matt Taibbi’s vampire squids look like cuddly housepets.

      Given that the Petronas deal also includes a provision that lets them piggy-back on more favourable conditions included in any other LNG agreement, this is a real multi-billion dollar race to the bottom. And we all get to go along for the ride, much like the people of Greece.

      Imagine, for example, that the people of British Columbia decide to elect a government determined to enact tougher environmental legislation. That government will be legally required to pay private companies for the privilege of acting in the public interest. And, as is the case in Greece, it is the average citizen who ultimately will wind up compensating Petronas through cuts to social programs, increased user fees, or tax hikes.

      This future conundrum is being designed by a government today that is desperate to show economic growth, yet seemingly has few ideas as to how they might accomplish this (aside from whatever they might have cribbed from a tattered Fraser Institute report).

      Now this seems like the kind of issue that a social democratic Opposition would pounce upon—but the B.C. NDP’s response has been alarmingly ambivalent so far.

      Last fall, when Petronas was publicly dithering over their investment decision, the B.C. NDP voted in favour of the government’s general approach: this was to reassure international investors that B.C. was open for business. That was a truly lost opportunity, as a unified and popular opposition led by, well, the Official Opposition might have changed the dynamic by activating public opinion. But here we are.

      Today, the B.C. NDP seems to be oblivious to the profound problems at the heart of the Petronas agreement. Instead, as best as I can tell, they seem most concerned that not enough jobs will be created over the life of the project. For a party petrified of being labelled as anti-business, I guess this is a somewhat fair point. But it leads me to ask how many (unionized) jobs will it take for them to go along with this sell-out of future generations of British Columbians. 2,000? 3,000? 500 in the right riding?

      The B.C. NDP needs an emergency injection of their own founding principles. They must remember that sometimes it isn’t a matter of negotiating a slightly less feculent version of the same shitty deal—it’s a matter of tearing it up.

      But we aren’t going to see that happen. We’re going to see this legislation get passed, with the significance of these provisions explained to the citizens of this province with all the care and attention to detail of a broker hawking a sub-prime mortgage.

      Sadly, the people of British Columbia won’t feel the teeth of this agreement for a few years, not until so many other fangs are in place that it will really bite. Enacted by a government elected by their parents, it will lock them into a democratic straight jacket alongside an environmentally destructive industry with dubious economic returns.

      By itself, the Petronas agreement won’t lead to a Greek-level corporate coup in this province, but it demonstrates a pattern of governance that sees multinational corporations lure different countries into a jurisdictional competition for investment, where good behaviour (loosening regularions, lowering standards, cutting taxes) is rewarded, while bad behaviour is sanctioned.

      And it’s a pattern of governance with which the B.C. Liberals seem increasingly comfortable.



      Just sayin'

      Jul 13, 2015 at 1:15pm

      Isn't this the same guy who demands corporate welfare initiatives to prop up his industry?

      Matt Toner, BC Greens

      Jul 13, 2015 at 2:14pm

      @Just sayin' - that's a bit like comparing pineapples and hand grenades. There is a passing resemblance, but one is much more likely to blow up in your face.

      Short-term measures to diversify our economy (like a labour tax credit for a non-resource based industry) are entirely different from an environmentally perilous deal with sharp economic penalties targeting future generations.

      Read the article, not just the byline.

      Darren T.

      Jul 13, 2015 at 3:04pm


      Short-term?! The film tax credit has been around for what, 20+ years? All it's done in that time is get more lucrative for the industry.

      I certainly don't hear many voices saying that the credit is no longer needed now that the industry is so large. Rather, we just get carpetbaggers demanding larger and larger credits lest they decamp for some other jurisdiction (that's been conned into joining this game) and leave people jobless here in BC.

      Corporate welfare is corporate welfare.

      Matt Toner, BC Greens

      Jul 13, 2015 at 3:46pm

      @Darren T - I'm afraid you're willfully missing the much larger point.

      In addition to existing concessions on royalties, taxes and LNG standards, the Petronas deal has financial penalties should the province attempt to better regulate that industry at any point over the next 25 years! Martyn Brown's piece on this site does a great job of unpacking the economic problems, but to me it's the abdication of sovereignty that is most appalling.

      We need to diversify our provincial economy towards cleaner, greener, more sustainable, and higher value industries. I'm actually not a huge fan of the film/tv labour tax credits, but at least they help achieve that goal... and, crucially, they are up for periodic renewal. Not so with these LNG covenants the province is making so carelessly.

      Darren T.

      Jul 13, 2015 at 4:24pm


      All fair points on the LNG deal, I just think you're trying to make a pretty convenient divide between corporate welfare you like and corporate welfare you don't like.

      The periodic renewal thing sounds like, but our experience in BC with the film credit is pretty clear - the prospect of reopening is just a new opportunity for the industry to ratchet up the pressure for yet-higher subsidies under the threat of major job losses. Same goes for your beloved interactive digital media tax credit, which was extended just this year from a "short" 5 years to 8 (presumably still short!) years.

      No industry that has learned to love subsidies will sit quietly when those subsidies look like they might disappear. Why would they?

      Missed the boat

      Jul 13, 2015 at 6:46pm

      Too, too late to get in on the 'boom' times with this complete waste of money in the quest to climb into bed with unethical companies for LNG. Not a clean source of energy, who the hell wants floating bombs off our coast, the destruction of the environment, more pipelines? Put our efforts into renewable food agriculture, legalize pot. SO many alternatives to keep our economy healthy. Oh yes, recall CC and her band of bandits. They abdicated their responsibility to the people of British Columbia long ago. No guarantee the jobs will be going to BC. Why are we even entertaining the idea of exploitation of OUR natural resources? Dumb asses.

      Matthew Helliwell

      Jul 13, 2015 at 6:53pm

      Great pieces coming out lately from Matt Toner, Pete Fry, and of course Andrew Weaver. Pretty solid reminder why I could never vote for either the NDP or the BC Libs.


      Jul 13, 2015 at 7:34pm

      Hm. Well the 2nd part of this reads like the attack of disgruntled (and defeated) past NDP candidate...a thinly veiled advert for the Greens. The 1st part is a hackneyed analysis of the Greek situation likely drawn from a couple of Guardian articles (incidentally, it was democracy that employed Greek politicians who willfully chose not to enforce tax collection and it is democracy that governs the tax revenue of the other 18 Eurozone countries when it comes to making loans to Greece).
      On the LNG deal, I agree its fraught with problems. But you understate one and overstate the other. First, the deal is for up to 35 years, not 25. Secondly, on future sterner environmental regulation, as long as it is not specifically targeted at the LNG sector, Pacific Northwest LNG has no recourse. With all due respect, this piece is why the voting public is so skeptical of the Greens on economic issues.


      Jul 13, 2015 at 8:04pm

      Just as FIPA provides Communist China much the same but for all Canadian natural resources.

      With zero recourse by any Canadian Court disputes to be decided for China in secret offshore.

      So does this mini FIPA style LNG deal for the state owned Corporation and any other in LNG.

      It provides exemptions on Environmental, Royalties and other gross subsidies, Corporate Welfare.

      This is the problem with any subsidy for any industry propped up by us the Citizens.

      Regardless of whether it's the "Film" industry or on a much larger scale for China or LNG Corporations, we pay when we should not.

      And that money is taken from our Social Services, Health Care and Education for Canadians.

      It's all Corporate Welfare, in this case on a much larger scale than most.

      Add to that the environmental impact of Site C (being built to provide subsidized power to LNG and the Tar Sands) we are being screwed yet again.

      We should be adopting a Norway style resource management and extraction for all our natural resources.

      Norway has it's own Stat Oil, state owned Oil Corporation that keeps the majority (80%) of the Oil & Gas revenues for the benefit of it's Citizens.

      Norway is currently one of the richest Countries with a Trillion Dollar surplus that slimy Politicians can not touch 4% of.

      In Canada, BC and Alberta in particular we have a structural deficit because of the Corporate Welfare and low to zero Royalty rates.

      I wonder if the tiny little (irrelevant under the Westminster system of Government like ours) Greens support a Norway style Royalty model?

      Meanwhile meaningless under our current Westminster system of Government small parties like the Greens have little chance in the near to medium term of ever forming either Official opposition (also meaningless under the majority rules Westminster system of Government) or as a Governing party in our life times.

      What minor parties do is siphon off votes in the Greens case on the left reducing the effectiveness of any main opposition. These small Parties are also easily ignored by whomever is the Governing Party.

      I have little time for all Politicians who I view as self serving sell outs catering to their specific special interests.

      Reminds me of the story of Animal Farm, "some Animals are more deserving than others".

      Unfortunately the voters of BC either stayed home or voted for the Corporate Welfare Liberals

      Luis R

      Jul 13, 2015 at 8:31pm

      Unfortunately even if the NDP fights this, a BC Lib majority will approve it. Will the next election be in time? But seeing as the electorate doesn't seem to care...